Reduced hours may keep workers in jobs, avert layoffs

Olivia Just

Published 10:40 pm, Tuesday, January 29, 2013

For decades, Connecticut has subsidized a program allowing workers to stay in their jobs at reduced hours, with compensation, as opposed to being laid off -- a solution that retains skilled workers and maintains employee benefits. But, in the 21 years since the work share program was launched in the state, few employers have participated or are even aware it exists.

Connecticut is one of 17 states that has used work sharing programs for many years, according to Bloomberg News, though such programs appear to have been just as under-used in other states, like Rhode Island, particularly before the recession. The Congressional Research Service found that, even in 2009, when the programs were most widely enacted, work sharing made up only 2 percent of unemployment insurance benefits, as reported by Bloomberg.

"Probably the vast majority of companies that would be able to use it don't even know it exists," Neil Rohon, resource associate at the Connecticut Dept. of Labor, said in an interview with Hearst Connecticut Newspapers. "Right now, I'd say there's probably a couple hundred employers participating in the state."

Though work sharing can technically be defined as an unemployment benefit, it differs from the traditional unemployment subsidies that provide a safety net for those who are between jobs. A voluntary program, work sharing allows employers to reduce the hours that full-time employees work, while the state will compensate each worker for a portion of their lost pay. In Connecticut, the program is available to any employer with permanent full-time employees, though seasonal employers are precluded. Businesses with as little as four employees can be eligible, and the program has naturally drawn a majority of smaller companies; Rohon speculates that 98 percent of the employers using the work-share program have 75 employees or fewer.

While on the program, beneficiaries are not required to look for other jobs, and employers report to the Department of Labor each week with the number of employees working on reduced hours. The idea is that, within a few months, the company will regain its prosperity enough to put its workforce back on a full-time schedule and dispense with the work-sharing program.

However, once the recession hit in 2008, the temporary nature of the work-share program began to change, with some of the participating companies stretching their use of the program to several years. Rohon remembered one company that used the program to put all its employees on a part-time schedule for three years, which eventually disqualified the employer from participating, as the workers could no longer be classified as full-time. At its peak in 2009 and 2010, work sharing in Connecticut had between 700 to 1,000 employers participating, according to Rohon.

"There was a big uptick at the end of 2008, 2009 and 2010, but since the end of last year, it's been dragging, which surprised me because the unemployment rate didn't drop," Rohon said. "But, with some companies, business never picks up again, so then they're forced to let people go."

In the past few years, the state's Department of Labor has extended the length of the work share program for some participating employers; according to the rules, an extension has to be filed every six months. Still, when work sharing was first implemented in 1992 here it was not designed for the kind of gaping unemployment -- with a jobless rate that remains stuck above 8 percent -- or long-term downturn the economy has recently seen.

"When Connecticut drafted this program in the early 1990s, no one could have foreseen the kind of economy we have now," Rohon said. "Half a decade -- that's a big downturn."

With 4.8 million Americans out of work for more than six months, according to the U.S. Labor Department, and more than a million more forgoing the job search altogether, Federal Reserve Chairman Ben Bernanke called the national unemployment crisis a condition of wasted potential, according to Bloomberg News.

The Workplace in Bridgeport, one of Connecticut's five Workforce Development Boards, focuses on long-term unemployment and its effects, which can include the lapsing of industry skills. One of the goals of the work sharing program is to keep workers in their jobs, not only for the extension of pay and benefits, but also to help employers maintain a skilled workforce and allow employees to keep their skills well-honed and relevant, which can be crucial in a difficult economy.

"It's always important to keep skills current and refreshed, even if you're working," said Tom Long, vice president of marketing and communications at the Workplace.

Though the participation may be small, work sharing seems to be a success among those who have taken advantage of it; Rohon said that the majority of feedback he receives from employers has been "very positive" and indicates that the program can boost morale within a company. However, it's difficult to say how work sharing can adapt to an economy in which many businesses are consistently not thriving.

"It's one of those things we don't want to go on for too long, but we also don't want to discourage companies from participating if it's going to save people from getting laid off," Rohon said. "It's sort of a double-edged sword."